ANNOUNCER: It is an investigation of the resistance to change inside major corporations-

MARTIN SMITH: Why did Toyota beat you to the Prius?

BETH LOWERY, VP, Environmental Affairs, GM: Toyota looked at the hybrid from an overall standpoint, and General Motors really looked at, "Can this vehicle make money?"

MARTIN SMITH: But yet Toyota is eating your lunch.

ANNOUNCER: -and a report on resistance to change in Washington-

Sen. SAXBY CHAMBLISS (R), Georgia: This bill will attack citizens at the pump-

ERIC POOLEY, Contributor, TIME Magazine: Congress is in no mood to debate anything that was going to increase gas prices, even by a little bit.

ANNOUNCER: -and an examination of the hard choices that lie ahead.

JEFF GOODELL, Author, Big Coal: We seem incapable of grasping what's at stake here perhaps because so much is at stake. If we don't do something about reducing CO2 emissions, we're going to cook the planet.

ANNOUNCER: Tonight, Heat, a FRONTLINE global investigation.

MARTIN SMITH, Correspondent: [voice-over] When we set out to investigate climate change, we had already heard a lot about polar bears in the Arctic and collapsing ice shelves in Antarctica. I decided to go to what some call the Earth's third pole, the Himalayas. My guide was climber and filmmaker David Breashears. He's been to the summit of Mt. Everest five times. This time, he was returning on a special mission.

[on camera] So where are you going?

DAVID BREASHEARS: I'm going to go right up there to about 19,000 feet, on these rocky ridges here that are in this early morning light to get a viewpoint here to shoot from the place where George Mallory shot in 1921 and see how much has changed in that amount of time.

I'm going up here, right up there on those pinnacles.

TIBETAN GUIDE: He passed this river?

DAVID BREASHEARS: Yes. It's a long way. And then we'll see how much this glacier has melted here.

MARTIN SMITH: First, Breashears had to cross a small river of icy water with his three porters. I stayed behind. It was going to take a fast climb in thin air up the side of a steep ridge with no trail.

Eight hours later, Breashears reached this spot at 19,000 feet. He'd identified it as the outcrop where British explorer George Mallory took his photograph of Everest in 1921. At the foot of the mountain, the main Rongbuk glacier, a frozen river of ice that flows from Everest's north side.

DAVID BREASHEARS: I first was on this side of the mountain in 1996, so I know this place well. And to look at the glacier here in 1921 and to look at it out there now, it's- the glacier's just gone.

MARTIN SMITH: Using photographs and maps, Breashears has calculated that the glacier has lost up to 40 percent of its ice. Glaciers are disappearing fast here. The United Nation's Intergovernmental Panel on Climate Change estimates that 80 percent of all glacier ice in Tibet and the Himalayas will be gone by 2035.

Earlier, I had visited one of the world's foremost glacier labs located in Columbus, Ohio. Here, ice cores from glaciers all around the planet are collected and studied. The lab's founder and director, Dr. Lonnie Thompson, is said to have spent more time at high altitude than any other scientist in the world.

Editors' Note: The IPCC stands by its core conclusion on glaciers -- i.e. that "Widespread mass losses from glaciers ... are projected to accelerate throughout the 21st century." But they have retracted their assertion that "80 percent of all glacier ice in Tibet and the Himalayas will be gone by 2035" attributing it to a scientist in a popular magazine who now says he was misquoted. It should not have been in the IPCC report they say.

[voice-over] How will warming affect the people that live on either side of the Himalayan range?

LONNIE THOMPSON, Ph.D., Glaciologist, Ohio State Univ.: Well, you can think of glaciers as water towers. They kind of store the water from the wet season and during wet times, and they disperse it during the dry season and the dry times. And they do that for free. You go down in these valleys and they're really dry parts of the world, except for the water that's coming from the glaciers and from the higher elevation sites.

MARTIN SMITH: For now, the melting glaciers are bringing more water to these slopes, but it's a mixed blessing. More water has attracted more settlers and thrown their environment out of balance.

NEPALI MAN: [through interpreter] As the population has increased, deforestation has also increased, so our cattle have less food and they're giving off less milk.

MARTIN SMITH: And what's happening here will not just hurt these farmers.

LONNIE THOMPSON: What really makes our time so different- people talk about, you know, "Oh, we've had these huge climate changes in the past." Yeah, that's true, but we never have had 6.5 billion people.

MARTIN SMITH: And nearly half the world's people depend on Himalayan and Tibetan glaciers for water. Among the major rivers that flow from here are the Ganges, the Indus, the Mekong, the Brahmaputra, the Irrawaddy, the Yangtze and the Yellow Rivers.

LONNIE THOMPSON: We're talking about millions of people living downstream, and therefore, what happens to those glaciers and what happens to the water supplies at the source is extremely important.

MARTIN SMITH: The Intergovernmental Panel on Climate Change predicts that in the near future, as the glaciers dry up, some major rivers will no longer flow year-round. IPCC chairman Dr. Rajendra Pachauri.

RAJENDRA PACHAURI, Intergovernmental Panel on Climate Change: Over a period of time, about 500 million people on the subcontinent are going to suffer from water scarcity as a result of the melting of those glaciers, and 250 million people in China. In terms of the impact on the lives and livelihoods of people, we're turning thousands of years of human history around and perhaps leaving people with no choice now.

MARTIN SMITH: Millions of people in China live in areas already starved of water. As their glaciers dry up, conflicts with their neighbors are inevitable. China's idea to divert water from the Brahmaputra has already heightened tensions with India.

Melting glaciers are just one problem. Scientists warn of many other consequences. Sea levels are rising, their waters absorbing CO2, contributing to the creation of vast dead zones devoid of life. Fisheries are failing. Deserts are also expanding. People are being forced off their land by frequent droughts. Worldwide, storms are becoming more violent, fires more frequent.

JOSEPH ROMM, Author, Hell and High Water: I think it is important for people to understand global warming is not the sole cause of everything that happens. What it does is it just makes certain things more likely. So you cross a threshold and you get a collapse. And unfortunately, once you've changed the climate, it becomes very hard to un-collapse, and it may be - it may very well be impossible. I mean, it may be that some of these changes are irreversible.

MARTIN SMITH: The overwhelming majority of the world's climate scientists warn that the only way to avoid larger disasters is for the world to dramatically reduce its emissions of greenhouse gases, cutting them by 60 to 80 percent by mid-century.

RAJENDRA PACHAURI: If we just sit back and say, "Oh, it'll happen," it's not going to happen. Climate change is being caused by human actions and we need to do something about it. And I think the sooner we realize that, the better.

MARTIN SMITH: Before the dawning of the Industrial Age, the level of carbon dioxide in the earth's atmosphere had remained relatively steady for hundreds of thousands of years. But as people began to burn fossil fuels - oil, coal and natural gas - on a large scale, CO2 levels began to climb.

By the mid-'50s, scientists had begun to wonder if there might be a consequence. This episode of the popular TV show The Bell Telephone Science Series aired in 1958.

Dr. FRANK C. BAXTER: ["The Unchained Goddess," 1953] Even now, man may be unwittingly changing the world's climate through the waste products of his civilization. Due to our release through factories and automobiles every year of more six billion tons of carbon dioxide, which helps air absorb heat from the sun, our atmosphere seems to be getting warmer.

RICHARD CARLSON: This is bad?

Dr. FRANK C. BAXTER: Well, it's been calculated a few degrees rise in the earth's temperature would melt the polar ice caps. And if this happens, an inland sea would fill a good portion of the Mississippi valley. Tourists in glass-bottomed boats would be -

MARTIN SMITH: But at the time, no one paid much attention to such theories, and in the U.S., industrial growth and human consumption accelerated through the '60s, '70s and '80s.

By the 1990s, we were consuming as never before, manufacturing more goods, using more electricity and driving bigger cars and trucks. Gas was cheap.

JEFFREY BALL, The Wall Street Journal: The history of the U.S. is a history of cheap energy. This country sits or sat on vast pools of oil. There was no reason to care.

MARTIN SMITH: Cheap and abundant coal also played its part.

JEFF GOODELL: Coal is the rock that built America. It was the engine of the industrial revolution. We should all be very grateful for all the miracles of modern life that coal has brought to us. But CO2 emissions are rising and rising and rising.

BOB MURRAY: Our electric needs in this country, according to the federal government, are going to increase 41 percent between now and 2020 - 41 percent between now and 2020. If the coal industry were eliminated and the 52 percent of the electricity that it accounts for, this country would go black.

Pres. GEORGE H. W. BUSH: In the United States, we have the world's tightest air quality standards.

MARTIN SMITH: In 1992, the world started talking about climate change at the Rio summit, but there was no action. At Kyoto, 1997, there were higher hopes.

Vice Pres. AL GORE: The human consequences and the economic costs of failing to act are unthinkable.

MARTIN SMITH: But the U.S. Senate balked because developing nations were exempted from making cuts. They feared that signing the treaty would put the U.S. at a competitive disadvantage. Four years later, President Bush made it clear he also rejected the treaty.

Pres. GEORGE W. BUSH: The Kyoto protocol was fatally flawed in fundamental ways.

MARTIN SMITH: Meanwhile, developing nations were entering a new era of rapid growth. Today, the rise of China threatens to overwhelm any hope of controlling CO2 emissions.

JAMES BROCK, Energy Consultant, Beijing: China is growing at a rate that is just massive. China is the proverbial teenager. The hormones are going in one direction. The body's growing faster than the brain. Some parts are not in coordination with other parts. The Chinese deny, at this point, that they should aspire to a lower standard than any other country. When people say, "Well, you can't develop a society where everybody can own a car like the United States," and the Chinese say, "Why not?"

MARTIN SMITH: At Geely, China's largest privately owned car company, they are racing to keep up with demand. Among their biggest sellers, the King Kong.

LI SHUFU, CEO, Geely International Corp.: [through interpreter] The car industry is growing quickly. We sold 160,000 cars last year. My plan is to reach 400,000 to 500,000 by next year and 700,000 in two years.

MARTIN SMITH: [on camera] You know, I've looked at your corporate profile, and I could find no mention of initiatives of any kind into higher efficiency vehicles of any kind.

LI SHUFU: [through interpreter] We haven't such a model yet, but we will in the future.

MARTIN SMITH: [voice-over] Nothing epitomizes China's growth more than the building of two new coal plants here every week. This plant outside Beijing belongs to Shenhua Energy Corporation, one of the biggest, fastest growing energy companies in the world.

[on camera] You grew 80 percent over the last year? You almost doubled your capacity?

LING WEN, CEO, Shenhua Energy: Yes.

MARTIN SMITH: Of electricity generation?

LING WEN: Correct.

MARTIN SMITH: And you expect to continue to grow 20 to 30 percent over the next five years.

LING WEN: Yes.

MARTIN SMITH: That's a huge amount of growth.

LING WEN: Yes, it's a very fast growth.

MARTIN SMITH: What kind of plans do you have to address emissions of carbon dioxide?

LING WEN: As a responsible company, I think we will do our best to reduce the CO2 pollution, if we can. But, how to say, as the CEO of this company, we must consider other issues. We must create money, not lose the money. It's my - I mean, my responsibility as the CEO of this company.

MARTIN SMITH: Your responsibility is to the shareholders.

LING WEN: First to all of the shareholders, second to the society.

MARTIN SMITH: Why not public first?

LING WEN: If all of the shareholders say, "Oh, see, Dr. Ling, the CEO, could you make the - your first responsibility to the public, then to all the shareholders, it's OK." But I'm afraid maybe all the shareholders, they cannot accept that concept.

MARTIN SMITH: [voice-over] Asia's other booming giant, India, will surpass China as the world most populous country by 2030. Here I found factories pumping out SUVs for India's growing middle class, and soon a $2,500 gas-powered car for millions more emerging from poverty. Today, everywhere you look, there's new construction. For India, it's a great success story, a triumph of free markets.

HAMEED BHOMBAL, V.P., Aditya Birla Industries: Everywhere you go, you're seeing construction going on. And everywhere you go, you see these kinds of things happening. You see all these store buildings that are coming up. They almost seem to be sprouting up over night. You wake up one morning, "Whoops! There's another tall building out there."

MARTIN SMITH: But as in China, growth is also the problem. Even the most basic building material, cement, is an issue. The process of making cement is one of the biggest industrial sources of CO2 emissions in the world.

[on camera] It surprised me when I learned that cement was the third largest - the process of making cement was the third largest contributor to greenhouse gas emissions.

S.K. MAHESHWARI, Sr. Exec., UltraTech Cement: Well, it's true because almost about 5 percent of the carbon dioxide emission which comes out in the world is from the cement industry. And looking at the volume of the cement industry, it is - is one of the biggest contributor for the greenhouse emission.

MARTIN SMITH: [voice-over] Most of the CO2 comes from roasting powdered limestone and clay inside large rotating furnaces.

HAMEED BHOMBAL: That's where the real heat is generated and that's the cause of pollution, that you have to supply energy to get it the right temperature.

MARTIN SMITH: [on camera] Are there alternatives?

HAMEED BHOMBAL: Everybody in the world uses that.

MARTIN SMITH: How do you get to a point where you can actually reduce the emissions?

S.K. MAHESHWARI: I mean, the CO2 emissions will be there. But there will be reduction.

MARTIN SMITH: Can you get to 80 percent reductions by 2050? Is that realistic?

S.K. MAHESHWARI: Eighty percent is maybe- may not be there. But definitely, about 10 percent reduction can take place.

MARTIN SMITH: [voice-over] In India, cement production is growing 10 percent a year and will continue to grow as India builds up its infrastructure.

SUNITA NARAIN, Ctr. for Science and Environment, New Delhi: We are standing at the precipice of hell. The Western model of growth is inherently toxic. It's highly capital-intensive and highly resource-intensive, uses a lot of materials, uses a lot of energy and generates a lot of waste. If every Indian was to live like an American, then the planet is doomed and the planet is doomed forever.

MARTIN SMITH: In December 2007, 9,000 delegates from 187 countries arrived in Bali, Indonesia, for the United Nations Climate Change Conference. Diplomats and scientists were convening to try to strike a new global climate treaty. As Dr. Rajendra Pachauri arrived, the IPCC had just issued a string of ever more urgent reports. He was hoping that governments, especially the U.S., were finally listening.

Ironically, the Bush administration had welcomed Pachauri to the IPCC, expecting that this engineer and economist, on the board of several large Indian energy companies, would be cautious and sympathetic to the U.S. position on climate change.

RAJENDRA PACHAURI, Inter-Governmental Panel on Climate Change: If we lose momentum over here, then we have a very short period of time -

MARTIN SMITH: Instead, Pachauri has repeatedly sounded the alarm and put responsibility squarely on businesses and governments in the industrialized West.

RAJENDRA PACHAURI: If one looks at the historical responsibility for the problem, the fact that the concentration of greenhouse gases is essentially the result of emissions that have taken place for 150-plus years, largely in the developed countries, that's one reason. And the second reason is that in terms of economic and technological capacity, the developed countries are certainly better equipped to do something about this than the developing world.

MARTIN SMITH: U.S. negotiators in Bali didn't see it that way.

IPCC PRESIDENT: Next is the United States.

PAULA DOBRIANSKY, U.S. Negotiator: Thank you, Mr Chairman. Unfortunately, there have been many strong statements -

MARTIN SMITH: They maintained that America would make no cuts unless developing nations also agreed. They didn't expect what happened next.

DELEGATE: -so I just want to state this preference of the developing countries -

PHILIP CLAPP, Pew Environment Group: For the first time, the developing countries stepped forward and said, "We will negotiate verifiable, measurable and reportable emissions reduction measures to be incorporated in the treaty." The developing countries called their bluff.

IPCC PRESIDENT: May I now call upon China.

PHILIP CLAPP: And China was in the lead in saying, "We should do that." The U.S. negotiator said no.

PAULA DOBRIANSKY: I have to say that, you know, the formulation that has been put forward we cannot accept. [delegates boo]

IPCC PRESIDENT: Thank you. Thank you, United States.

PHILIP CLAPP: And they were booed on the floor. And suddenly, Paula Dobriansky recognized that the story that was going to come out of Bali was that the United States destroyed a major climate agreement.

IPCC PRESIDENT: The United States wishes to speak again.

PHILIP CLAPP: So she sat there, flipped the microphone back on, shut the meeting down by saying, "We won't stand in the way of a consensus."

PAULA DOBRIANSKY: Let me say to you that we will go forward and join consensus in this today. [delegates applaud]

PHILIP CLAPP: Who knows whether there was actual direct communication with the White House on that or not. The cell phones were going like crazy at the U.S. delegation table. But it was clearly, I think, in her negotiating instructions that, above all, don't let the United States get blamed for blowing up a deal.

MARTIN SMITH: There were other changes under way in Washington. Democrats had won the 2006 mid-term elections. At the Senate Environment Committee -

AL GORE (D-TN), Former Vice President: Local restrictions on -

Sen. JAMES INHOFE (R), Oklahoma: All right, Senator Gore. I'm very sorry. I don't want to be rude, but -

Sen. BARBARA BOXER (D-CA), Environment Committee Chair: -just for a minute. I want to talk to you a minute, please.

MARTIN SMITH: In was Barbara Boxer, a California Democrat.

Sen. BARBARA BOXER: You're not making the rules. You used to when you did this. You don't do this anymore. Elections have consequences. [laughter, applause]

MARTIN SMITH: Some American business leaders seemed to get the message -

Sen. BARBARA BOXER: Today we'll hear from a group of leading corporations -

MARTIN SMITH: -and showed up as part of a new organization called the U.S. Climate Action Partnership.

PETER DARBEE, Chmn., Pacific Gas & Electric: Our organization is here because we share a view that climate change is the most pressing environmental issue of our time.

JEFFREY BALL, The Wall Street Journal: They basically called for carbon regulation, a huge switch from what their - their public lobbying positions in the past. Why did they do it? Well, they didn't do it because suddenly they changed their environmental outlook. They did it because they could read the political handwriting on the wall.

MARTIN SMITH: Whatever their motives, some senators were won over.

Sen. JOHN WARNER (R), Virginia: It was a recognition that those most affected, i.e. the industrial base, are ready to do something to reduce the CO2 emissions.

MARTIN SMITH: [on camera] Did it have more impact than listening to all the scientists over the years?

Sen. JOHN WARNER: Well, there's real money in that group.

Sen. BARBARA BOXER: The meeting stands adjourned.

MARTIN SMITH: [voice-over] And on the campaign trail, both candidates were promising bold new leadership.

Sen. BARACK OBAMA (D-IL), Presidential Candidate: We can't wait to solve one of the greatest crises that mankind has ever faced and roll back greenhouse gases and global warming!

Prof. STEPHEN SCHNEIDER, Climatologist, Stanford Univ.: Both of the candidates have strongly said they're endorsing serious policies that will bring the United States back into the fold of the civilized nations, looking at what it is doing in our - in our share to the contribution to global warming. So I am very optimistic that we're moving in the right direction.

MARTIN SMITH: But the big question is, will all the momentum bring real change?

Prof. JEFFREY SACHS, Earth Institute, Columbia Univ.: For a long time, we ignored the problem. For a long time, we debated the problem. For a long time, the U.S. government ran away from the problem, pretended it wasn't there.

ERIC POOLEY, Fmr. Managing Editor, Fortune Magazine: We have to overcome our natural way of doing business. If this is all just a compromise between various special interests, we're not going to get it done.

JOSEPH ROMM, Author, Hell and High Water: Fundamentally, we have about, you know, 10 years to reverse course. If we stay on our current path for 10 years, it will be all but impossible to avoid catastrophic global warming.

JEFF GOODELL, Author, Big Coal: We seem incapable of grasping what's at stake here. And perhaps it's because so much is at stake and addressing this really means changing sort of the essential economic engine of our lives, which is fossil fuels.

MARTIN SMITH: To understand the magnitude of the task, consider the scale of America's addiction to fossil fuels like coal. Every year, Americans consume over a billion tons. In the Powder River Basin in Wyoming, they shovel a million tons a day.

STEVEN LEER, CEO, Arch Coal: Our single mine of Black Thunder produces more energy every year, or every day, than the North Slope of Alaska. And every 24 hours, we'll have approximately 35 miles of trains loaded.

MARTIN SMITH: Most of the trains head east to power plants in the Midwest and South. Coal shipments make up half of all rail traffic in the country. At this railyard in Nebraska, coal trains account for 70 percent of traffic.

CAMERON SCOTT, Union Pacific Railway: Every day, we process 150 to 170 trains, which if you do the math is, you know, about a train every seven minutes.

MARTIN SMITH: [on camera] So they're coming out of the Powder River Basin through here, on to the east and to the south?

CAMERON SCOTT: That's exactly right. And as -

MARTIN SMITH: The empties going back.

CAMERON SCOTT: And the empties coming back the other way. There is no question that there's nothing like this anywhere on earth. It is absolutely the world's largest conveyor belt. And it never stops.

MARTIN SMITH: [voice-over] There are 600 coal-fired power plants in the country. A large plant will burn through one whole trainload in just 12 hours.

CHARLIE POWELL, Manager, Mountaineer Plant: We generate 1,300 megawatts per hour at this generation facility. So we power up many cities from this one unit.

MARTIN SMITH: This plant in West Virginia is owned and operated by American Electric Power. In 2007, AEP was the single biggest emitter of CO2 in America.

CHARLIE POWELL: The thought of green is nice. It's politically the right thing to do. But people also like their electricity. When they flip the switch, they want the lights to come on.

JEFF GOODELL: Most Americans don't have any idea that we still burn coal. They think of it as something that went out with, you know, top hats and corsets and because they don't see it because it's burned far away and it just powers our lights, and we don't think about where that electricity comes from and what really goes on behind the light switch.

MARTIN SMITH: [voice-over] The facts are these. It takes one pound of coal to power your TV for four-and-a-half hours, another pound to power your bedside light for two evenings. The average American household uses nine-and-a-half tons of coal every year. Fifty-two percent of all electricity consumed in America comes from coal. And with electricity consumption rising, utilities like AEP say coal is indispensable. They refer to it as base-load power. It means it is always available, unlike intermittent sources, such as solar or wind.

ANNOUNCER: Welcome to the 2007 second quarter employee earnings Webcast.

MARTIN SMITH: After an earnings update, the moderator asks Morris a few friendly questions.

MODERATOR: With global warming a hot-button issue and with some presidential candidates suggesting, naively, that wind and solar will solve it, shouldn't we do more to shape the public debate?

MICHAEL MORRIS, CEO, American Electric Power: That's an excellent question. What I don't want to do is recreate the impression that American Electric Power is a "just say no" utility, that we are -

MARTIN SMITH: When I visited AEP, Congress was just beginning to debate how to regulate carbon emissions. Utilities were vying for a seat at the table.

MODERATOR: How optimistic are you that we'll get our voice heard?

MICHAEL MORRIS: Oh, I'm certain we'll get our voice heard because we are constantly queried on these issues.

MARTIN SMITH: What needs to be heard, says Morris, is that America desperately needs to burn not less coal, but more.

MICHAEL MORRIS: If we don't build more base load generation, and the U.S. economy continues to grow, we will ultimately get to an economic brownout environment that'll have tremendous negative impacts on what goes on in this country.

MARTIN SMITH: [on camera] And you're going to meet that demand by building more coal plants?

MICHAEL MORRIS: Clean coal. We hope so. You bet.

COAL TELEVISION COMMERCIAL: You're looking at the most abundant fuel in our country.

MARTIN SMITH: [voice-over] In the summer of 2007, America's coal companies, railroads and utilities launched a major advertising campaign.

1st COAL COMMERCIAL: Coal. It's the resource that generates half of our electricity at a third the cost of most other fuels. It's the fuel that powers our way of life.

MARTIN SMITH: The ads stress that coal will be clean.

2nd COAL COMMERCIAL: -including the capture and storage of CO2. It's a big challenge, but we've made a commitment, a commitment to clean.

MARTIN SMITH: We found some coal activists outside a Democratic primary debate in Philadelphia.

CATHY COFFEY, Americans for Balanced Energy Choices: There's technologies that are going to make electricity from coal emissions free within the next 10-15 years, so we're saying don't cut it out of the mix yet.

MARTIN SMITH: It turned out they'd spent the year shadowing the candidates, working the crowds.

CATHY COFFEY: Let me give you some information about energy in Pennsylvania-

MARTIN SMITH: In Washington, the coal lobby has traditionally gotten its way. Consider the story of the coal-fired power plant that sits just a few blocks from the Capitol.

FRANK O'DONNELL, President, Clean Air Watch: The Capitol power plant is about a century old at this point. It burns coal. It provides ice water to Senators. That's its primary mission. A couple of years ago, the architect of the Capitol, who manages it, decided, "Well, maybe we ought to try to convert it to a lower-polluting natural gas." And he was immediately told by powerful senators who control his budget - Mitch McConnell of Kentucky and Robert Byrd of West Virginia - "Oh, no, you're not. We'll cut your budget if you try to tamper with our baby." It's as if Tony Soprano had a seat in the Senate. If this Congress can't even clean up the most egregious polluter in its own back yard, how can they deal with the problem across the entire United States?

MARTIN SMITH: But in 2008, there was a new push on Capitol Hill to rein in carbon emissions. Senator John Warner had drafted legislation, along with Senator Joe Lieberman, to mandate a 60 percent cut in greenhouse gases by mid-century. And while how the industry does that is unclear, the bill's authors are betting on it.

[on camera] Is there a future for coal?

Sen. JOE LIEBERMAN (I), Connecticut: There's got to be a future for coal in the U.S. It's too important to us. And again, I think once you create this law, this mandate, the coal industry and a lot of others are going to figure out how to use coal and not pollute the air.

ANNOUNCER: [GE video] In the marshlands of central Florida, there's not much activity for people -

MARTIN SMITH: [voice-over] To make the case for clean coal, the industry likes to point to a power plant outside Tampa, Florida, known as Polk One. GE made a short film about it.

ANNOUNCER: With the help of GE's advanced cleaner coal technology, Tampa Electric is converting coal into a cleaner burning fuel.

MARTIN SMITH: We went down for a visit. Mark Hornick is the plant's manager.

MARK HORNICK, Manager, Polk Power Plant: This is the top floor of the gasifier. We call it the burner deck.

MARTIN SMITH: The plant touts a process known in the technical jargon of the utility business as Integrated Gas Combined Cycle, or IGCC. It's essentially a process of turning coal into a cleaner burning gas.

MARK HORNICK: And it doesn't take long to do that. So we mix that coal with the pure oxygen and that reaction happens very fast and converts that solid coal into that fuel gas, what we call syngas.

MARTIN SMITH: And then, in theory - and this is the big prize - they can capture CO2.

MARK HORNICK: And then we would take that captured CO2, compress it and inject it into the ground, deep into a saline formation, a salt water formation. It would go in as a supercritical fluid and kind of mix with that water, and it would be deep enough where there's confining layers above it such that it would not migrate to the surface, wouldn't impact drinking water or have any adverse impacts. So that's what's envisioned for carbon capture and storage.

MARTIN SMITH: The reason they haven't tested carbon capture and storage is that the state of Florida refuses to indemnify the utility for damages in case of a CO2 leak.

JEFF GOODELL, Author, Big Coal: The problem is carbon dioxide is an asphyxiant. If the CO2 is buried 2,000 feet underground and there's some minor earthquake and - and it can leak up through a fissure and get into someone's basement, and you could be asphyxiated without knowing it. It's odorless gas. It's - you know, there's no way to detect it.

MARTIN SMITH: And so until liability issues are overcome, Polk will not be running a test. But IGCC plants continue to be promoted as carbon capture-ready.

MARTIN SMITH: At AEP's Mountaineer plant in West Virginia, they may be closer to actually running a test. Some time in late 2009, they plan to inject CO2 into a well beneath this shed next to the parking lot.

CHARLIE POWELL: The well to hell, as I've been known to call it, is approximately a 10,000-foot deep well that we drilled four years ago -

MARTIN SMITH: [on camera] Wait a minute. That's two miles deep.

CHARLIE POWELL: That's two miles deep.

MARTIN SMITH: [voice-over] They are not using the IGCC process we saw in Florida but experimenting with a kind of CO2 scrubber. Its advantage is that it can be installed in America's existing fleet of power plants. Most have 20 or 30 more years of useful life, and the industry doesn't want to scrap them. But even if it works, plant manager Charlie Powell points out, removing CO2 may still be too expensive.

CHARLIE POWELL: You can get it out, but at what price? It may be that other options become more economically viable than the technologies to remove CO2.

MARTIN SMITH: Another obstacle is that not every plant is near a suitable storage site.

JEFF GOODELL: It doesn't work everywhere. Wyoming, for example, the geology is well suited to it. Parts of Appalachia, it's well suited to it. But other parts, New England, the Southeast, it's not.

MARTIN SMITH: And that means building a lot of new infrastructure. Every year, U.S. power plants emit up to two billion tons of CO2. These emissions alone equal the total worldwide flow of petroleum today. Disposing of such a volume of CO2 would require building a massive new pipeline grid.

CONFERENCE CALL MODERATOR: Ladies and gentlemen, welcome to the American Electric Power second quarter 2007 earnings conference call.

MARTIN SMITH: Even before the global credit crunch, big banks were getting nervous about carbon capture and storage -

MODERATOR: And our first question this morning comes from the line of Dahlman Rose.

MARTIN SMITH: -asking utility executives more and more questions about cost.

DANIELE SEITZ, Energy Analyst, Dahlman Rose: I was just wondering if you could compare the price of the new coal plants that you are planning -

MICHAEL MORRIS, CEO, American Electric Power: What we said all along, that we thought integrated gas would be 20 to 30 percent more costly than the more traditional pulverized coal - that really has proven to be the case.

MARTIN SMITH: [on camera] What's the cost of this going to be?

MIKE MORRIS: Right now, it's too early to tell.

MARTIN SMITH: No idea?

MIKE MORRIS: Well, no, no. I wouldn't say that. I don't want to be too forecasting about something like that, to be considerably off base with it. People say it may add 20, 30 percent to the cost of energy. That seems like a reasonable number. If you're blessed, as we are along the Ohio River Valley, with sub-surface geology that will accept captured carbon for storage, it's a very different place than if you're in the great Southeast and you've got to transport your CO2 through a pipeline system for considerable distances. That adds cost. So to say today that we all are very comfortable with some price forecast would just be silly.

[on camera] The word on the street is that Southern doesn't really favor carbon capture and storage because you don't have the geology in the Southeast.

DAVID RATCLIFFE, CEO, Southern Company: Martin, I think the truth is that we don't know where we have storage capability in this nation at this point in time. We haven't even come close to defining what will be required in storage, what are the legal liabilities and what are the permitting requirements, much less the infrastructure needed to develop that storage and to move the carbon - the CO2 into that storage, whether it's pipelines or trucks or whatever it is. We haven't even scratched the surface yet.

JEFFREY BALL, The Wall Street Journal: I think there's a reality check going on about carbon capture and storage right now. There was huge rosy optimism about carbon capture and storage. It was a - it was really the quintessential silver bullet. It would allow you to take what was fundamentally a dirty fuel and burn it cleanly - cheap and dirty fuel and you can burn it cleanly - and at least a huge chunk of the problem would be solved. What's wrong, I think, is that reality is intruding.

JEFF GOODELL: And at a certain point, you have to ask, "Well, if I'm going to go to all this expense, why not just do something else?" Why not do, you know, clean renewable power or something that is - perhaps the same price or maybe a small percentage more expensive right now but vastly simpler and eliminates all of these technological problems?

MARTIN SMITH: If carbon capture and storage doesn't work, is the game over for your business of generating electricity with coal?

DAVID RATCLIFFE: I would say that we'd have a hard time in a carbon-constrained future burning coal without the ability to capture CO2.

ERIC POOLEY, Contributor, TIME Magazine: Look, in order to run for president in this country in 2008, you have to be for clean coal. You can't go to Indiana and Ohio and say, you know, "I want to do away with coal." You're just not going to win votes that way.

[www.pbs.org: Explore the candidates' positions]

Sen. JOHN McCAIN: In the state of Colorado, over 80 percent of the electricity comes from coal. In Ohio, it's over 90 percent.

ERIC POOLEY: There's an amazing correlation between being a swing state and being dependent on coal. You look at that map, and you know why both candidates are very strongly in favor of clean coal. That's politics.

MARTIN SMITH: This is the other big challenge, the second largest contributor to greenhouse gases. But capturing and storing tailpipe CO2 emissions is not feasible. What's needed is dramatically more efficient or zero emission vehicles. America's cars and trucks emit more CO2 than all the cars in Europe, Japan, China and India combined.

Rep. RICK BOUCHER (D), Virginia: We continue our focus on the proper response to the challenge of climate change. We have a very distinguished panel of witnesses -

MARTIN SMITH: In March of 2007, the automakers were in Washington to discuss raising fuel economy standards. Congress has been trying for years.

Rep. MIKE DOYLE (D), Pennsylvania: I think the way we're going to achieve this is maybe thinking differently than how we've thought about it in the past, to start to think outside the box. And it just seems to me -

JEFFREY BALL, The Wall Street Journal: There have been many attempts over the years to force improvements in fuel economy in this country. And the most notable is in the late '70s after the Mideast oil crisis.

ALAN MULALLY, CEO, Ford Motor Co.: When the CAFE law was passed in the 1970s, the goal was to reduce our dependence on foreign oil -

JEFFREY BALL: And the history is that that attempt early on worked. When those rules came into effect, the average fuel economy of the U.S. fleet was about 20 miles per gallon. And by the mid-'80s, early to mid-'80s, it had gone up to about 25 or so. That was quite a significant step in a few years.

MARTIN SMITH: But ever since then, fuel economy - or CAFE standards, as they are known - have remained frozen. Car companies and autoworker unions have always fought them. They insist they never were effective.

RICK WAGONER, CEO, General Motors: Yes, sir, against its stated goals of, and I'm quoting, "reducing U.S. gasoline consumption and oil imports," it wasn't effective. And I think it's for the reason that -

BETH LOWERY, VP, Environmental Affairs, GM: Over time, we have looked at the CAFE policy and said, "If we're really looking at reducing dependence on petroleum and reducing CO2 emissions, CAFE standards have not been very effective in this country to do so." As an overall policy, if you're looking at reducing dependence on petroleum, that alone is not going to get you there.

Rep. EDWARD MARKEY (D), Massachusetts: Mr. Mulally, you said that CAFE was not a success. You couldn't be more wrong.

FRANK O'DONNELL, President, Clean Air Watch: There had been many members of Congress saying we needed to have more aggressive fuel economy standards. And for years, literally decades, the car companies lobbied aggressively to prevent that from happening.

MARTIN SMITH: The man the car companies routinely turn to is Democrat John Dingell of Michigan.

Rep. JOHN DINGELL (D), Michigan: And third, that I understand a statutory increase in fuel economy standards may have unintended consequences in the marketplace -

MARTIN SMITH: Over the years, Dingell has fought virtually every regulation, from seatbelts and airbags to tailpipe emissions and fuel efficiency standards.

[on camera] Why has it taken so long to increase fuel efficiency standards in the U.S.?

Rep. JOHN DINGELL: There have been some small changes in both trucks and automobiles, but the basic problem has been the absence of technology.

MARTIN SMITH: Critics say that elected officials like yourself are too beholden to large corporate interests to really get anything done.

Rep. JOHN DINGELL: I disagree with that. I'm not too beholden to anybody, except the 800,000 people that live in the 15th District. I'm their man in Washington. It's my job to look after them and to see that they do well.

MARTIN SMITH: [voice-over] And with Dingell's help, Detroit has successfully resisted attempts to raise fuel economy standards for more than 32 years. In the absence of action by the federal government, the challenge has come from here.

Gov. ARNOLD SCHWARZENEGGER (R), California: You know, when I became governor of the great state of California, I promised that I will protect California's environment.

MARTIN SMITH: Governor Arnold Schwarzenegger has pledged to raise fuel economy in California to 42.5 miles per gallon and is removing 20,000 old, dirty gas guzzlers from the roads every year.

Gov. ARNOLD SCHWARZENEGGER: Let's crush the car, terminate the waste and have cleaner air and breathe easier.

JERRY BROWN (D), California Attorney General: This is a commitment to an objective that's measurable, but how we get there has yet to be fully articulated.

MARTIN SMITH: [on camera] Can you do it?

JERRY BROWN: That remains to be seen. Physically, can we do it? Yes. Psychologically, politically, spiritually - that has to remain an open question.

MARTIN SMITH: [voice-over] The bill put Schwarzenegger on a collision course with Detroit, where a billboard depicted the governor as their enemy. But California has a long history of demanding and getting cleaner cars. Back in the '70s, under pressure from the state, automakers were forced to address California's smog problem. Over the years, officials came to expect that the automakers would eventually cooperate.

TERRY TAMMINEN, Governor's Environmental Adviser: The auto business has always had a love-hate relationship with California. Obviously, they love the fact that we're the biggest car market on earth. They hate the fact that we try to regulate what comes out of their tailpipes.

MARY NICHOLS, Chair, California Air Resources Board: But overall, we've had a very cooperative relationship. And frankly, I was taken aback when I found out that the industry was not only not prepared to be cooperative, but that they were determined to fight us in every possible arena.

MARTIN SMITH: The stakes were very high. Eighteen other states were lining up to adopt the California standards. But to make it law, California needed a ruling from the EPA to allow them to set stricter fuel economy standards than the federal government.

TERRY TAMMINEN: We still have to go to the Bush administration to get what's called a waiver from the Clean Air Act to go ahead and implement those regulations. And the car companies have lobbied strenuously, successfully, with the Bush administration to prevent us from doing that.

FRANK O'DONNELL, President, Clean Air Watch: They lobbied not only the EPA, but they lobbied Congress. They lobbied the White House. They lobbied the Transportation Department. The U.S. Transportation Department was caught red-handed actually trying to line up members of Congress to lobby the EPA.

MARTIN SMITH: Internal Department of Transportation documents show that more than 70 congressmen and governors were called by department officials and warned that an EPA waiver could have significant impacts on the car industry.

On Capitol Hill, Congressman Dingell proposed a law to make California's waiver request illegal. There were also several key visits to the White House by car company executives.

FRANK O'DONNELL: This all-out war by the car industry against California.

MARTIN SMITH: In December 2007, the EPA denied California's waiver.

[on camera] Have you been denied a waiver before?

MARY NICHOLS: This is the first time that California has ever been denied a waiver under the Clean Air Act.

JERRY BROWN: The Bush White House, and I presume the president himself, gave the direction to the Environmental Protection Agency, "Don't do it."

TERRY TAMMINEN: And that's resulted in us having to take the Bush administration to court because they're withholding that waiver in violation of the Clean Air Act.

MARTIN SMITH: So you've sued them to get them to act.

TERRY TAMMINEN: Correct.

MARTIN SMITH: And nothing.

TERRY TAMMINEN: So far, nobody's home which somewhat exemplifies the Bush administration.

MARTIN SMITH: [voice-over] We wanted to talk to someone in the White House about why the administration blocked action and about the extent of lobbying by the car companies. They refused to offer an interview.

Sen. BARBARA BOXER (D), California: The mission of the EPA is to protect-

MARTIN SMITH: And when California Senator Barbara Boxer demanded to see internal EPA memos, she was thwarted.

Sen. BARBARA BOXER: This is what they did to us. They put this white tape over the documents. And staff had to stand here. It's just unbelievable.

MARTIN SMITH: EPA administrator Stephen Johnson was called before the committee and scolded.

Sen. BARBARA BOXER: This isn't classified information, colleagues. This is information the people deserve to have. Now, I want to show you what your staff said-

MARTIN SMITH: Boxer focused on the advice Johnson had received from his staff.

Sen. BARBARA BOXER: -and we're going to share that information with the American people. You said-

MARTIN SMITH: Among the memos uncovered by the committee was this one, notes from the EPA's director of transportation and air quality as she prepared talking points for a meeting with Johnson. "The eyes of the world are on you," it reads. "The stakes are huge. If you deny this waiver, I fear the credibility of the agency will be irreparably damaged."

Sen. BARBARA BOXER: The professionals at the EPA have been solid on all of the things. All of the environmental issues, they've come down on the right side. But this administrator has just walked away from them and walked into the arms of the White House, walked into the arms of the special interests. It's just really very, very sad.

STEPHEN JOHNSON, EPA Administrator: First of all, the staff presented me with a range of options-

MARTIN SMITH: Johnson said he took everybody's view into consideration.

STEPHEN JOHNSON: Certainly, people within the administration had their view. But ultimately, it came to me and making a decision and a judgment call on my part, and I made that decision.

FRANK O'DONNELL: Johnson himself initially was in favor of granting the waiver.

MARTIN SMITH: [on camera] What's the evidence of that?

FRANK O'DONNELL: Well, we've heard anecdotal evidence for sure from people within the EPA that he was going to do that. We know that the White House was heavily involved in the final decision. We know this because the White House has invoked executive privilege and has refused to disclose a lot of the documents about what went on in the White House in its interactions with Johnson.

MARTIN SMITH: [voice-over] It's not known exactly what went on in the White House. But just before the waiver was denied, on Capitol Hill, Congressman Dingell brokered a compromise. Congress would raise fuel economy standards but by considerably less than California had requested.

FRANK O'DONNELL: The California standards were going to be considerably tougher than the standards being considered by Congress. Once Congress passed its bill, the car companies lined up behind it. The White House then told the EPA, "Stand down. You're to do nothing."

MARTIN SMITH: Had the California standards been adopted by all 50 states, they would have reduced greenhouse gas emissions 40 percent over the more moderate standards adopted by Congress.

ERIC POOLEY, Fmr. Managing Editor, Fortune Magazine: So the big picture here is that every time we get a good idea about how to move forward, there's delay, there's huge battles on the Hill. The lobbyists come in and get a compromise that's a victory for the old Washington way of doing things and a defeat for the kind of new way that we need to begin doing things if we're going to solve this problem.

MARTIN SMITH: No one has resisted change more than big oil. They sell carbon for a living, and their rigs, pipelines and refineries represent trillions in sunk investments. This rig sits 200 miles off Newfoundland and rises 16 stories above the surface of the ocean. It cost ExxonMobil and its partners $4 billion. It's the largest oil platform in the world, Hibernia. It's rooted to the ocean floor in about 250 feet of water in an area famous for disasters.

WAYNE WARWICK, ExxonMobil: The Titanic went down about 200 miles south of here. So we - we are - you do see a lot of icebergs through here. Pack ice has been a design basis that we were set up for.

MARTIN SMITH: [on camera] Does the thing shake at all?

WAYNE WARWICK: Just a small vibration.

MARTIN SMITH: How much oil are you looking at here?

WAYNE WARWICK: We're sitting on - we're hoping to recover upwards of just over a billion barrels of oil. Right now, we're at 10 years into production. First oil was in 1997. And we've just hit the milestone of 500 million barrels produced off the facility.

MARTIN SMITH: [voice-over] Along with major projects off Angola and in Russia, Hibernia is one of ExxonMobil's biggest investments. And it's paying off. Every five to six days, a tanker leaves here with a payload of crude oil worth about $100 million. Multiply that times hundreds of wells and tankers feeding Exxon's refineries and it adds up to make ExxonMobil the largest corporation in the world.

MARTIN SMITH: In 2007, Exxon's revenues surged to over $400 billion. After expenses, the company cleared $40 billion, the largest corporate profit ever reported.

EXXON SCIENTIST: -have our geoscientists going all over the world, looking at rocks.

MARTIN SMITH: At Exxon's Houston research center, their best and brightest scientists and engineers spend all their time deciding where to drill next.

EXXON SCIENTIST: A common technique is something called the geophone. You can see motions in the ground that are 10,000 times smaller than the thickness of a human hair.

MARTIN SMITH: For now, ExxonMobil is investing less than one tenth of 1 percent of its profits in renewable energy, much to the consternation of environmentalists.

EXXON ENGINEER: If we run the animation on the left now, this is a fly-through of the Guadalupe-

MARTIN SMITH: [on camera] Isn't this the time to be getting out of oil and gas and- and diversifying?

SHERRI STUEWER, Vice President, ExxonMobil: If you look at what the energy balance is over the future, in spite of the growth of the renewables - which will grow in the near future - for decades, the predominant source of energy is going to be fossil fuels - oil, gas and coal. So we see a role for us in the near term in helping to deliver those fuels that meet the needs of the world.

MARTIN SMITH: Why not take more of your resources and deploy them towards development of alternative energies? Why the balance is so heavily tilted towards oil and gas exploration?

SHERRI STUEWER: I think that no matter what a company spends on research in a particular area, there would probably always be someone that said, "It's not enough." I think we feel like we're doing a responsible job of evaluating how we can bring our strengths to the challenge of finding energy technologies for the future.

EXXON SCIENTIST: The longest well that we've drilled to date is about seven miles measured depth. It happens to be an industry record.

JEFFREY BALL, The Wall Street Journal: None of the oil companies are investing in alternatives in a meaningful way, if by meaningful you - if you define meaningful as a sizable chunk of their total energy investment. They are all of them investing the vast majority of their money in finding more and natural gas, even BP, even Shell. The differences are at the margins. And fundamentally, all these oil companies are still oil companies. No one is beyond petroleum.

[on camera] When you look at Exxon or Chevron or even Shell and BP, and they're putting such small percentages into renewable research, should we be outraged?

Prof. DANIEL KAMMEN, U.C. Berkeley Inst. of the Environment: Well, I think we should be outraged. Companies that profess to be sensitive and aware of public need and what's good for citizens overall need to respond. So we are waiting for the big companies to really play the role that they profess to on TV and in advertisements. And so I do think there's a real reason to be outraged at the lack of action so far.

MARTIN SMITH: Not only have big oil companies not invested much in renewables, but for years they were among the largest contributors to so-called climate change denier groups, groups like the Heartland Institute, the organizer of this 2008 convention.

MARTIN SMITH: Exxon was also a principal funder of the Competitive Enterprise Institute, the group responsible for this ad.

TELEVISION COMMERCIAL: Now some politicians want to label carbon dioxide a pollutant. Imagine if they succeed. What would our lives be like then? Carbon dioxide - they call it pollution. We call it life.

MARTIN SMITH: Exxon dropped funding for the Institute in 2005 but continued to support other denier groups.

SHERRI STUEWER: It is very painful to hear the allegation that we have somehow supported poor quality science or ignored the science on this issue.

MARTIN SMITH: [on camera] But true, you did support groups like Competitive Enterprise Institute, Heartland Institute. Was it a mistake to support those groups?

SHERRI STUEWER: When we look at those groups over time, we make the best decision we can make at the time about whether to continue supporting them.

MARTIN SMITH: I'm not sure what your - what your answer to the question is, whether it was a mistake to support those groups or not.

SHERRI STUEWER: The support for those groups I think you cannot take out of time context. We made the best decision we could at the time about whether the - the mix of issues that those groups were supporting fit with out needs. We made that decision. We are making those decisions every year on an ongoing basis.

MARTIN SMITH: But this year, there was something new. Major shareholders filed a resolution insisting that the company and its CEO, Rex Tillerson, change course.

MINDY LUBBER, Shareholder Advocate: At ExxonMobil, investors from across the company went to the board and filed shareholder resolutions and said, "We want you to address climate change. We want you to bring the carbon footprint down. And we, as investors, want that to happen now because we think it's good for the company."

MARTIN SMITH: [on camera] Have you talked to Rex Tillerson?

MINDY LUBBER: Rex Tillerson, interestingly enough, has been one of the only CEOs, who when asked by huge investors to sit down and have a meeting, has denied them a meeting and instead has sent senior staff. I mean, we are talking about some of his largest owners, not activists, who have been asking for a meeting for years. The company is smart. They make a lot of money. They need to get on the bandwagon and be part of the solution.

STEPHEN HEINTZ, Rockefeller Brothers Fund: It's time for ExxonMobil to become one of the creative leaders in this field. It has the sophistication. It has the knowhow-

MARTIN SMITH: [voice-over] Leading the charge were not just any shareholders, they were descendants of Exxon's founder, John D. Rockefeller. They filed a resolution calling on ExxonMobil to do more renewable energy research.

NEWSCASTER: Inside the meeting, CEO and board chairman Rex Tillerson faced the very real chance of having to give up his seat on the board.

MARTIN SMITH: The resolution received support from 27 percent of all shareholders, a high tally for a dissident shareholder resolution.

NEWSCASTER: After the vote, Tillerson said while ExxonMobil is investing in new technologies, the focus will remain on oil and gas.

REX TILLERSON, CEO & Board Chmn., ExxonMobil: We have a corporate social responsibility, in my view, to ensure the world continues to receive the energy it needs in a fashion-

MARTIN SMITH: Facing rising criticism, ExxonMobil and other oil companies were summoned to Capitol Hill to explain their policies.

JEFFREY BALL: Exxon would tell you that they are watching the development of a whole panoply of renewable energy technologies but that they don't think that any of those technologies have gotten to the point of economic viability yet. And meanwhile, Exxon will do what Exxon knows best how to do, which is run around the world trying to pull oil out of the ground.

MARTIN SMITH: The consequences can be very negative. In recent years, the big oil companies have put down stakes in the Canadian tar sands. There's a lot of oil here, enough to keep generating oil company profits for a long time.

[www.pbs.org: Watch this program on line]

CHRISTIAN HOULE, Royal Dutch Shell: We can extract oil for about 155,000 barrels per day for about 40, 50 years ahead of us. Even at minus-40, we keep going, keep digging. It's cold here, obviously, for the people, for the mechanics, but we keep going non-stop.

MARTIN SMITH: The problem is that the oil here is mixed with sand and clay and extracting it comes with a cost to the climate. That's because the process uses lots of heat, pressure and chemicals. The result is that oil from the tar sands has a carbon footprint two to three times greater than ordinary crude oil.

JOSEPH ROMM, Dept. of Energy, 1995-'98: And the tar sands are a goopy mess. The tar sands are not really sustainable. There's no way Canada can meet its global warming commitments with the tar sands. Any claim the Canadians have ever had to being green and greener than the U.S., which I think they'd like to believe, the tar sands, you know, throws out the window.

But look, oil is $90 a barrel, so the tar sands are incredibly profitable. You can't do it in an environmentally responsible fashion. But at $90 a barrel, everything looks good.

JEFFREY BALL: These companies don't exist to be morally upstanding, although they would certainly tell you that they want to be. They exist to make money for their shareholders. They will respond to the signals with which they're presented in the market. And I think at the end of the day, Exxon hasn't had market signals to shift away from oil.

MARTIN SMITH: In this election year, the political signals have been very clear. It's the high price of oil, not climate change or renewable energy, that's on most people's minds.

ERIC POOLEY, Contributor, TIME Magazine: When we began this campaign, John McCain was opposed to offshore drilling. When he saw where the political winds were blowing, he reversed course and supported offshore drilling.

McCAIN SUPPORTERS: Drill, baby, drill! Drill, baby, drill!

ERIC POOLEY: John McCain, having flipped his position on offshore drilling, started bashing Obama for being against drilling. In other words, he's attacking Obama for holding the same position that McCain had held up until about two weeks before.

Unless you were in favor of some form of drilling, the American people didn't want to hear anything you had to say on energy. They didn't want to hear anything you had to say on climate. Drilling was sort of the litmus test. Obama finally realized he was in the wrong place, and so he switched.

Sen. BARACK OBAMA: Increased domestic oil exploration certainly has its place as we make our economy more fuel-efficient and transition to other renewable-

MARTIN SMITH: As I've traveled through America's energy landscape this past year, it's become increasingly clear that tackling climate change is going to require a huge and concerted from government. But when it comes to government leaning on big business, the recent past contains some instructive lessons.

Fifteen years ago, President Clinton invited Detroit's Big Three CEOs to the White House and announced the Partnership for a New Generation of American Vehicles.

Pres. BILL CLINTON: [September 29, 1993] Today we're going to try to give America a new car-crazy chapter in her rich history, to launch a technological venture as ambitious as any our nation has ever attempted.

MARTIN SMITH: Clinton thought he could bargain his way to a solution.

JOSEPH ROMM, Dept. of Energy, 1995-'98: I worked at the Department of Energy during the Clinton administration, where we created a deal with the automobile companies that we would not work to pass regulations to make tighter fuel economy standards, but in return, they would partner with us to develop a triple-efficiency, 80-mile-per-gallon family car.

Vice Pres. AL GORE: This is not an ordinary kind of decision. These three men really have done something extraordinary.

MARTIN SMITH: The project got off to a good start. The car companies went to work on building prototypes of diesel electric hybrids. The Clinton administration pledged over a billion dollars to the effort. Within a few years, Ford, Chrysler and GM each rolled out a concept car - the Dodge ESX, the Ford Prodigy, and General Motors's Precept.

REPORTER: When will we see this kind of hybrid on the road?

HARRY PEARCE, Vice Chmn., General Motors: Well, we've made a commitment to have a hybrid vehicle in production by the year 2001.

MARTIN SMITH: But that was a commitment they failed to keep.

GMC COMMERCIAL: What's behind the grill is what matters most.

MARTIN SMITH: Instead, the Big Three chose to sell big cars and trucks.

FRANK O'DONNELL, President, Clean Air Watch: I mean, they did a lot of posturing for photos in the Rose Garden and photo ops. But at the same time, they were grinding out sport utility vehicles and Hummers that got atrocious fuel economy. And that's where their big money was coming from.

MARYANN KELLER, Car Industry Analyst: I think that they were just as amazed in Detroit that every time they made something bigger, more powerful, more doors, and more stuff in it, we bought as many as they could build.

MARTIN SMITH: Quietly, the Partnership for a New Generation of American Vehicles faded from view.

[on camera] What happened with that initiative?

BETH LOWERY, VP, Environmental Affairs, GM: Actually, I'm not that familiar with the specific stuff, but I'm - my understanding is that that was a project that all the teams worked on. And we learned a lot from that project. There were a number of technologies it put in place, and as a project, we worked on what would be achievable at that point in time.

MARTIN SMITH: [voice-over] But what wasn't achievable for the big three U.S. automakers was achievable for Toyota and Honda. Ironically, the Japanese scrambled because they feared they were going to get left behind.

JOSEPH ROMM: Because the Department of Energy had excluded Toyota and Honda from this partnership because they were foreign auto companies, Toyota and Honda built hybrids on their own and introduced them into the U.S. market and got an advantage in the marketplace by being perceived as interested in fuel economy. And Detroit has, until the last year or two, stuck its head in the ground and it has given to Toyota a 10-year advantage in fuel economy technology.

Prof. STEPHEN SCHNEIDER, Climatologist, Stanford Univ.: Detroit waited until they got murdered in the market and until the supply and demand just simply drove their monster cars out of public favor before they started to act. Foresight - they need foresight.

MARTIN SMITH: [on camera] Why did Toyota beat you to the Prius?

BETH LOWERY: Toyota looked at the hybrids and the Prius from an overall standpoint, knew there would be the loss of money for some time on the cost of that, but looked at it from a overall marketing and image standpoint, and General Motors really looked at it from a business case. Can this vehicle make money?

MARTIN SMITH: But yet Toyota is eating your lunch.

BETH LOWERY: Well, I - as I mentioned before, General Motors is very committed to reducing emissions. We're very focused on bringing products to market that are going to satisfy the customers not only in the U.S. but globally, and we are working every day on fuel efficiency.

CHRYSLER COMMERCIAL: I want a hybrid that fits my life-

MARTIN SMITH: Today, American car companies are playing catch-up, furiously offering new hybrids while ramping up their alternative car research. The most promising of the alternatives is the plug-in electric car.

GM COMMERCIAL: The electric car is here.

MARTIN SMITH: GM's most recent effort was the EV-1. Its story was first told in a popular investigative documentary, Who Killed the Electric Car? The film reported how the EV-1 was developed in response to a California mandate for zero-emission vehicles, how when California loosened the mandate, GM abandoned the project.

CHRIS PAINE, Filmmaker: ["Who Killed the Electric Car?"] I don't imagine there are very many EV-1s left that haven't been crushed out. It's pretty sad.

MARTIN SMITH: [on camera] Why'd you have to crush them? Why'd you have to destroy them?

BETH LOWERY: Well, actually, we have a number of them that are in museums and that are in universities. And then with respect to some of them, we did recycle them, which is what we do with vehicles at the end of the life cycle.

MARTIN SMITH: So that was a recycling program, which was crushing them and - for scrap? Right?

BETH LOWERY: Yeah. Absolutely.

MARTIN SMITH: [voice-over] Now, years later, GM is starting over. They're betting billions of dollars that this car, the Chevy Volt, will put them back in the game.

ROBERT LUTZ, General Motors: A GM electric vehicle is an inconvenient truth.

MARTIN SMITH: It's a unique concept. While the engine is fully electric and can operate as a plug-in, the Volt can alternatively use on-board fuels like hydrogen, ethanol or gasoline to recharge its battery. GM invited FRONTLINE to come see the Volt during a publicity shoot. It didn't go well. The car could hardly make it up this small hill. Then it stalled altogether. The shoot was canceled.

[on camera] I went to see the Volt on display. It was running at about 10 miles per hour. Your representative there suggested that, if we wanted to, we could speed up the tape. And then, after about 15 minutes, it conked out. It wasn't a confidence-builder. Where are you now on that car?

BETH LOWERY: Well, the Chevy Volt was introduced last January as a concept vehicle. We have a production team in place to really advance the production of the vehicle, as well as working on the batteries. So we're in the process of testing lithium ion batteries that could be used for a plug-in capability at this point in time, and we're hoping in the spring to have additional vehicles for driving.

MARTIN SMITH: When's that car going to be on the market? How much is it going to cost?

BETH LOWERY: Well, we certainly don't know what the cost would be, and we don't have a specific date. We really have a "stretch objective" by the end of the decade to have something in the marketplace with respect to the Chevy Volt.

MARTIN SMITH: [voice-over] GM is now saying that the Volt is on target to be in dealer showrooms by 2010.

FRANK O'DONNELL: The question is, Why are we reinventing the wheel when they already had a car that was serviceable, then junked it? Now, a decade later, they seem to be starting all over again.

MARTIN SMITH: And once again, GM has gone back to Washington. This time, the big automakers have asked for and received $25 billion in low-cost loans to help them build a new generation of vehicles.

Another cautionary tale about business and government is the story of corn-based ethanol. Initially, it had nothing to do with climate change. But today, ethanol is routinely promoted as a green solution.

JEFFREY BALL, The Wall Street Journal: Ethanol started in this country before concern about climate change was pervasive. It was a political push by corn producers in the Midwest.

MARTIN SMITH: Ethanol took off after the oil shocks of the 1970s as a domestic alternative to Middle Eastern oil. Farm states embraced the boost to their economies and dozens of corn ethanol refineries sprang up overnight.

MINDY LUBBER, EPA official, 1995-'01: Everybody thought, "New gold rush - ethanol. It's just the alternative fuel, and let's make as much of it" - and we saw investments from Wall Street, from pension funds across the board.

T. BOONE PICKENS, President, BP Capital: Senator Dole said, "You're against ethanol. Let me explain to you how it works. There are 21 farm states and 42 senators. Those people want ethanol and they're going to have ethanol. And you're wasting your time trying to explain it's a bad idea."

MARTIN SMITH: [on camera] Just that simple.

T. BOONE PICKENS: That simple. I think it was just that simple.

MARTIN SMITH: [voice-over] Good idea or not, ethanol is now a huge business with more than $7 billion in annual government subsidies.

ETHANOL COMMERCIAL: What if we could lower greenhouse gas emissions with a fuel that grew back every year? What if we could live green by going yellow?

MARTIN SMITH: Car companies like GM have jumped on the bandwagon.

JEFFREY BALL: The reason is that GM can tweak an existing engine to accept E85 - 85 percent ethanol, 15 percent gasoline - for about 150 bucks a car. And GM believes that at the end of the day, people may say that they want a green car but people aren't willing to pay that much more.

MARTIN SMITH: [on camera] Let's say everybody's driving an E85 vehicle. What does that do for reducing carbon emissions?

JEFFREY BALL: Well, there are disagreements about that. It has to do with how that ethanol is produced. There are studies which say that there's a net benefit in carbon emissions. There are studies that say that that net benefit in car in reducing carbon emissions isn't so great.

MARTIN SMITH: What does the flex fuel vehicle really do for reducing CO2 emissions?

BETH LOWERY: Actually - and the CO2 reduction, it depends where you get the ethanol from. So corn is different than sugar cane is different than cellulosics. So it ranges from 15 percent all the way to about 65 percent.

MARTIN SMITH: But the few service stations that we have are putting out corn-based ethanol, right?

BETH LOWERY: Absolutely. At this point in time, it is corn-based.

MARTIN SMITH: And so the savings that you get on CO2 emissions from using corn-based ethanol would be how much?

BETH LOWERY: It's about a 15 percent reduction.

MARTIN SMITH: [voice-over] GM is using an optimistic estimate. Some studies show that corn-based ethanol may actually increase overall emissions, depending on how the corn is farmed, fertilized, harvested and transported. All these processes have their own carbon footprints that can offset savings over using gasoline.

Prof. DANIEL KAMMEN, U.C. Berkeley Inst. of the Environment: Corn ethanol is simply a bad biofuel. And it's a bad biofuel several times over. We, in this country, have optimized corn, ironically, to be as greenhouse-gas-intensive as possible. We reward farmers for using more fertilizer, more irrigation because those things have been cheap historically. So we have lots of greenhouse gasses and carbon embedded in what it takes to grow an ear of corn. And the analysis that my lab and many others have done says very clearly that corn is simply not a good feed stock for biofuels.

MARTIN SMITH: Regardless, the corn lobby continues to throw its weight around Washington and has helped the auto companies win a fuel efficiency credit for every E85 car they sell, even though very few drivers have access to ethanol filling stations.

[on camera] You say you have 2.5 million E85-ready vehicles on the road.

BETH LOWERY: Yes.

MARTIN SMITH: How many of those are actually using ethanol?

BETH LOWERY: Well, there's a few pumps there, and also-

MARTIN SMITH: A few. But there's not much.

BETH LOWERY: Right. It's not widespread.

MARTIN SMITH: Negligible amounts.

BETH LOWERY: It's not widespread.

MARTIN SMITH: [voice-over] In fact, out of a total of 120,000 gas stations nationwide, only 1,600 offer ethanol, most in the Midwest. California has just 10, New Jersey none.

[on camera] We've invested a lot of money in ethanol. Is that getting us anything?

AMY MYERS JAFFE, Baker Institute, Rice Univ.: The corn-based ethanol program is going to be considered one of the biggest follies ever implemented in energy policy anywhere in the world in the history of energy policy. Ethanol is not a solution to greenhouse gases.

MARTIN SMITH: [voice-over] There are some who believe that the answer lies in making ethanol from other plants, like switchgrass. But even then, there are problems.

Prof. DANIEL KAMMEN: And the problem is that we don't know how quickly we will have a crop that itself produces enough biofuel. And that's not the whole equation. In the last year, we've learned a fairly striking piece of new science, and that is that there's an indirect land use effect of growing biofuels that is very negative. And that is, if a piece of land goes out of food production in the U.S. Midwest, in the global market for food, that opens up an opportunity for a producer in Brazil, in Indonesia, in Ghana, or somewhere else to go into production. And frequently, that comes at the expense of new land being carved out of rain forests, carved out of the savanna, that was already storing carbon.

MARTIN SMITH: The World Bank says using more land to grow fuel inevitably will lead to greater food shortages and higher food prices. Meanwhile, President Bush has called for a seven-fold increase in ethanol production by 2017. U.S. corn ethanol producers have seventy new ethanol refineries planned.

Sen. JOHN McCAIN: I opposed ethanol subsidies because I thought they were going to distort the market. They distorted the market.

ERIC POOLEY, Contributor, TIME Magazine: John McCain wants to get rid of ethanol subsidies. Barack Obama does not.

Sen. BARACK OBAMA: And I have been a big supporter of ethanol because Illinois is a big corn-producing state. It's been good for farmers. It's been good for the rural economy.

ERIC POOLEY: Obama is from Illinois, which grows a great deal of corn. And so it was only natural for him to be for ethanol. McCain is from a state that does not grow corn.

MARTIN SMITH: [on camera] There's no corn in Arizona.

ERIC POOLEY: That's right.

MARTIN SMITH: Only when food prices began to rise did Obama begin to soften his position.

Sen. BARACK OBAMA: ["Meet the Press," May 4, 2008] If it turns out that we've got to make changes in our ethanol policy to help people get something to eat, then that's got to be the step we take.

AMY MYERS JAFFE: Everything that's happened wrong in energy in the United States has happened because there was a group of voters that put their own parochial needs ahead of our nation. West Virginia coal miners, Michigan autoworkers, farmers from Iowa - none of these groups have thought about our nation. They're thinking about their small local community. We have to think as a nation. We need a leader who is going to stand up and say, "We need to do this together," and it's doable.

MARTIN SMITH: In Europe and in Japan, governments have been much more successful instituting policies that foster efficiency and renewable energy. It stems from the fact that Europe and Japan never had much oil.

Prof. STEPHEN SCHNEIDER, Climatologist, Stanford Univ.: They had fewer fossil fuel or other kinds of energy resources by themselves and they had to husband them better. And they also were acutely aware of the security threats to their country if somebody cut off the supplies.

JEFFREY BALL: And as a result of that, governments bit the bullet in Europe and Japan and imposed policies that were not popular with consumers, but over a period of years, imposed tax policies that had the effect of first making gasoline much more expensive, and second, making cars that got lower fuel economy much more expensive through painful tax policy.

Prof. STEPHEN SCHNEIDER: That combined with the fact that Europe has had a long tradition of public investment and public protection and the U.S. has long had suspicion of big government and suspicion of public investment. So you have some political and cultural differences between us and Europe and Japan.

[www.pbs.org: Read the interview]

MARTIN SMITH: The result has been that in Europe and Japan, cars are smaller and more efficient. Europe is also the world's leader in deploying renewable power. This solar farm just outside Berlin is one of the largest in the world. The German government began granting large subsidies to alternative power providers. Their contribution is still small. Solar produces just 0.6 percent of Germany's electricity, but that's six times what the U.S. produces.

Wind is a similar story.

"Mr. WIND": [television commercial] I think I was always misunderstood.

MARTIN SMITH: This ad compares wind to an underappreciated giant.

"Mr. WIND": People just didn't seem to like me.

MARTIN SMITH: Today wind provides over 7 percent of Germany's electricity, about 10 times what wind energy provides in America, in spite of the fact that Germany is not very windy.

"Mr. WIND": I finally feel useful.

Prof. DANIEL KAMMEN: Germany has a wind resource poorer than that of North Dakota. In North Dakota, we have about 200 megawatts of wind power installed. Germany has 20,000 megawatts. And yet we have a better wind resource in one state alone.

MARTIN SMITH: In sharp contrast to Europe, wind and solar energy in America have received inconsistent government support.

JEFFREY BALL: If you look at a graph of the construction of wind power in this country, it looks like an EKG chart, with peaks and valleys that essentially exactly approximate decisions in Washington on subsidies. And if you're in business and you're watching this, you don't have much reason to be confident that there's going to be suddenly consistency here by Washington. So you're skittish.

MARTIN SMITH: One businessman who's not skittish is Texas oilman T. Boone Pickens. He's already amassed a fortune of around $2 billion second-guessing the big oil companies, but at 80 years old, he's still interested in making more. Sensing that the mood in Washington is about to shift, he's planning to build the world's biggest wind farm.

[on camera] So you went into the wind business to make money. How are you doing?

BOONE PICKENS, President, BP Capital: Haven't made any money, but I think I will make money. We're getting ready to commit for about $2 billion worth of turbines next month. So yeah, I believe in it, and the only dollar that's in the game right now is mine.

MARTIN SMITH: [voice-over] Pickens plans to install 2,500 wind turbines and generate 4,000 megawatts of electricity. He's expecting to gross hundreds of million dollars a year. And he say's there a lot more potential.

T. BOONE PICKENS: If you gave me the assignment today, "We need 150,000 megawatts in the next 10 years," I'd go to Sweetwater, Texas.

MARTIN SMITH: Starting in Sweetwater and running north through Oklahoma, Kansas, Nebraska and the Dakotas is America's biggest wind corridor.

T. BOONE PICKENS: Then if you take off west from Sweetwater, you can pick up solar. And the Californians love that. So you're talking about increasing in 10 years to 150,000 megawatts. It could be accomplished in that corridor - north, south, east, west.

MARTIN SMITH: In the spring of 2008, Pickens took to the airwaves to sell his idea.

T. BOONE PICKENS: [CNBC "Squawk Box"] And if you look at a corridor, a huge corridor of wind-

MARTIN SMITH: And he called on the federal government for help.

T. BOONE PICKENS: Somebody got to sit down and look at it and decide what we're going to do because it is huge.

T. BOONE PICKENS: [television commercial]_ I'm T. Boone Pickens. I've been an oil man my whole life, but this is one emergency we can't drill our way out of.

MARTIN SMITH: He followed up with a nationwide ad campaign, positioning himself as a savior of the American economy who can deliver energy independence.

MARTIN SMITH: What he wants from the federal government is the same thing that all wind producers want.

T. BOONE PICKENS: You're going to have to have production tax credits.

MARTIN SMITH: [on camera] In order to-

T. BOONE PICKENS: -which-

MARTIN SMITH: -help you with operating costs?

T. BOONE PICKENS: Yes.

MARTIN SMITH: To make it cost competitive?

T. BOONE PICKENS: Exactly. You have to have it.

MARTIN SMITH: [voice-over] He also needs the government to open corridors for transmission lines to move electricity from wind farms to customers. To be viable, both wind and solar will require billions in infrastructure investment.

T. BOONE PICKENS: The way I see government should operate in this, they should open up corridors and help with that and make it happen. You can't go in and invest a huge amount of money and not have a way to get your money back and make a profit. I would expect to make money out of it.

MARTIN SMITH: As calls for carbon-free power grow, nuclear power is getting a fresh look. It's already the source of 20 percent of America's electricity.

Patrick Moore is a paid spokesman for the nuclear lobby representing 32 utilities with nuclear plants in their portfolios.

PATRICK MOORE, Nuclear Industry Lobbyist: [radio interview] The statistics show that nuclear energy is among the safest technologies.

It is simply and clearly obvious that nuclear energy is going to be the most important base technology for energy, like providing the bulk of our electricity in the future, and, hopefully, charging our cars and running heat pumps in our houses so we can eliminate fossil fuels from our transportation and our infrastructure at the same time.

MARTIN SMITH: Moore wasn't always so enthusiastic. In the 1970s, he was a founding member of Greenpeace and a fierce nuclear opponent.

[on camera] In 1976, you called nuclear power plants "slow atomic bombs. Nuclear power plants are, next to nuclear warheads themselves, the most dangerous devices that man has ever created."

PATRICK MOORE: That's how I saw the world at that time. I was wrong. And it's - I mean, it was a fact back then in the cold war that we saw nuclear energy and nuclear weapons as all part of the same technology and all part of the same thing, as if all things nuclear were evil.

MARTIN SMITH: By the late '70s, nuclear energy was a troubled industry. In large part due to the success of anti-nuclear activists, it was burdened with numerous federal and state regulations and was experiencing massive construction cost overruns.

The nuclear accident at Three Mile Island was the final nail in the coffin.

PA SYSTEM: There has been a state of emergency declared on Three Mile Island.

MARTIN SMITH: [on camera] People look at Three Mile Island, it scares them.

PATRICK MOORE: Well, it's not rational to be scared by Three Mile Island, that's for sure.

MARTIN SMITH: Why not?

PATRICK MOORE: Because, no one was injured at Three Mile Island. It did not leak, the radiation. And that was because engineers designed a reactor dome that was made to prevent the radiation from coming out in the event of an accident. And it worked. It was a safety system that worked.

MARTIN SMITH: [voice-over] To be fair, there was some leakage of radioactive gas, but it didn't go far and any serious leak was contained. Still, it frightened communities. No application for new nuclear plant construction has been approved since. And new plants still face big obstacles.

Prof. STEPHEN SCHNEIDER, Climatologist, Stanford Univ.: And also, what are you going to do with the waste? I think that there are technical solutions, but you can't get any location. Nevada doesn't want any of that waste.

MARTIN SMITH: These issues of waste and cost make it unclear whether an expansion of nuclear energy will ever be politically or economically viable.

ERIC POOLEY, Contributor, TIME Magazine: A lot of the opponents of nuclear point to the spiraling cost of projecting new plants, the price of cement has gone up so much, the price of steel has gone up so much. So nuclear power may be a low-carbon option, but it's not a low-cost option yet.

PATRICK MOORE: I find that really interesting, that people are challenging the cost of nuclear energy. All you have to do is look at France, which has 80 percent nuclear energy and does not have unreasonable energy prices.

MARTIN SMITH: [on camera] If the French can do it, why can't we do it?

Prof. DANIEL KAMMEN: Well, the French have done a couple of things differently than we do, one of which is they've standardized the designs to a large extent.

MARTIN SMITH: But we've done that now.

Prof. DANIEL KAMMEN: Well, we've done it now. But our process to permit and to evaluate how a plant will work, and do the financing, is all over the map. It's a hodgepodge based on where you are, who the financing team is, how you work with utilities.

JEFFREY BALL: And this returns to sort of a theme we've been talking about. France didn't happen simply because someone decided that they wanted - that they like nuclear energy. It happened because the government decided it was going to impose a strict policy, and it followed through with that policy, much to the consternation of a lot of consumers and environmentalists over decades. But that takes immense political will, and it's not clear that other countries are going to follow.

MARTIN SMITH: The future of nuclear power in the U.S. could be very different depending on who becomes the next president.

Sen. JOHN McCAIN: Nuclear power is the most dependable source of zero emission energy we have.

ERIC POOLEY: McCain wants to double down on nuclear power. He wants to - like, he's an old nuclear Navy guy, right? He thinks it's safe. He thinks we can solve the problems and he wants full steam ahead.

Sen. JOHN McCAIN: And we've been sailing Navy ships around the world for 60 years with nuclear power plants on them and we've never had an accident.

ERIC POOLEY: Obama says we need to solve a few problems before we go down that road. He's not opposed to nuclear power, but he's not willing to move ahead with it yet. So this is a strong difference between the two of them.

Sen. BARACK OBAMA: Until we can make certain that nuclear power plants are safe, that they have solved the storage problem, I don't think that's the best option. I am much more interested in solar and wind and biodiesel and strategies in alternative fuels that not only -

MARTIN SMITH: So can America summon the political will necessary to address climate change?

In December of 2007, the Senate Environment Committee sat down to decide whether the Lieberman-Warner climate bill, an economy-wide effort to cut carbon emissions by 60 percent, should be recommended to the Senate floor for a vote. At the last moment, Senator Inhofe led an effort to derail the legislation by submitting hundreds of amendments.

Sen. JAMES INHOFE (R), Oklahoma: At the heart of the matter is that this bill is all pain and no gain. If this bill should pass, which it won't - but if it should pass, this is the going to be the greatest boon for China.

MARTIN SMITH: China, Inhofe argued, would benefit because legislation would drive up energy costs, and as a result force American companies and jobs overseas.

Sen. KIT BOND (R), Missouri: I represent millions of families, farmers, drivers and workers who will pay higher heating bills, suffer more pain at the pump and lose more jobs because of the bill.

Sen. BENJAMIN CARDIN (D), Maryland: I happen to think that the economy's going to respond in an appropriate way and that energy costs may, in fact, go down.

Sen. BERNIE SANDERS (I), Vermont: Global warming is a catastrophic crisis facing our planet. If we do not act boldly-

MARTIN SMITH: After nine-and-a-half hours, the bill was put to a vote.

Sen. BARBARA BOXER (D-CA), Committee Chair: On this vote, the ayes are 11, the nays are 8. The ayes have it, and the bill is reported favorably to the Senate.

MARTIN SMITH: The real test was to come on the Senate floor. A lot was at stake. The bill would grant utilities hundreds of billions of dollars for carbon capture and storage technology and hundreds of billions more for wind and solar incentives and other renewable research. Automakers would also get billions to develop cleaner cars. It's estimated that the total package over the next 40 years would run anywhere from $1.5 trillion to $7 trillion, by any standard, one of the largest bills ever debated by Congress.

FRANK O'DONNELL, President, Clean Air Watch: The amount of money involved here is staggering. You're talking about legislation that could affect the power industry, the car industry, the chemical industry. Every manufacturing industry in America is going to have some say in what happens here.

MARTIN SMITH: At the heart of the bill is a market mechanism called "cap and trade," designed to penalize businesses that don't cut their emissions.

JEFFREY BALL, The Wall Street Journal: The government imposes a cap beyond which companies cannot emit. Companies that emit more than their quota of allowances buy from companies that emit less.

MARTIN SMITH: And over time, the number of available pollution permits is reduced. Scarcity drives up their cost. In theory, businesses will then invest in new clean technology, creating new business opportunities and new jobs.

JEFF GOODELL, Author, Big Coal: It would force the coal guys to come up with making carbon capture and storage work. It would begin to level the playing field so that other forms of power and other ways of thinking about power could compete competitively.

MARTIN SMITH: But when the bill hit the Senate floor, gas prices were hitting all-time highs.

Sen. DAVID VITTER (R), Louisiana: It mandates nothing on the part of other industrializing powers, like China and India-

MARTIN SMITH: It was practically dead on arrival.

Sen. SAXBY CHAMBLISS (R), Georgia: This bill will attack citizens at the pump and increase their electricity costs-

ERIC POOLEY: The Lieberman-Warner bill, it never really had a chance of passing.

Sen. KIT BOND (R), Missouri: -would increase energy prices-

ERIC POOLEY: It hit the floor as gasoline prices were peaking. Congress was in no mood to debate anything that was going to increase gas prices even by a little bit.

Sen. TOM CARPER (D), Delaware: Our planet is growing warmer. We, as human beings, are a major contributor to that.

SENATOR: Mr President, I yield the floor, and I make the point of order that a quorum is not present.

MARTIN SMITH: Senate Minority Leader Mitch McConnell moved to cut off any debate by ordering Senate clerks to read the entire 500-page bill into the record. The bill fell into a procedural black hole and never came to a vote.

ERIC POOLEY: The proponents of this bill - Joe Lieberman, John Warner, Barbara Boxer - the people that were really trying to push this ahead did not have their communications strategy together when they hit the floor of the Senate. They were scrambling, if you will. They didn't have the votes. The debate was creaming a lot of Democratic senators who were up for reelection. They didn't want to be there.

MARTIN SMITH: [on camera] Where were the candidates?

ERIC POOLEY: The candidates were hiding. [laughs] The candidates both support the concept of cap and trade, but neither of them showed up.

MARTIN SMITH: [voice-over] Both candidates may have determined that in the midst of an election, it wasn't a good time to vote yes on a big government spending bill. The real question is what will Obama or McCain do once elected?

Meanwhile, the planet is operating on its own timetable.

JOSEPH ROMM, Dept. of Energy, 1995-'98: We don't have a lot of time to reverse course. The Arctic is probably going to be ice-free by 2030, and possibly by 2020, which is stunning because people used to think it was going to be 2080 or 2100. And we have seen a fantastic explosion of wildfires around the world and in the United States.

I think we are starting to see a perception shift that maybe climate change is as serious as people thought. I think Hurricane Katrina played into that. I think these unbelievable droughts in the United States that we've been seeing - Australia's been seeing an unbelievable drought. Parts of China have seen brutal droughts.

At the same time we are heating up the oceans. We're cramming carbon dioxide into them. And there are great fears that you will render large tracks of the ocean lifeless.

MARTIN SMITH: Emissions continue to rise. China has now passed America as the biggest emitter of CO2. India, Indonesia, Mexico, Brazil, Russia - all are emitting more, too, the inevitable result of more and more development.

A global recession may slow the rate of growth in emissions, but it will also crimp governments' ability to act. And a recession will make it more difficult for America to take the lead.

ERIC POOLEY, Contributor, TIME Magazine: We're not going to be able to spend all the money that the nuclear industry wants us to spend on nukes and all the money that the coal people want us to spend on coal and all the money that solar and wind and hydro people want us to spend on those things. So where do we make our bets? Where do we spend our dollars?

Prof. STEPHEN SCHNEIDER, Climatologist, Stanford Univ.: What makes this challenge so daunting is that it has to fly in the face of habits, like more consumption and more and more and more is good, as opposed to maybe not good. Maybe we need a different kind of consumption.

Prof. JEFFREY SACHS, Earth Institute, Columbia Univ.: We have to change the way we live, change the way we produce, have a new kind of energy system. I would suggest we roll up our sleeves and that - see what we have, try out what we can do, invest in what we need.

SUNITA NARAIN, Ctr. for Science and Environment, New Delhi: If we understand what climate change is going to do and we understand what kind of cuts are needed, we will have to be far more serious about what we do. I believe today there's a lot of rhetorics, there's very little action.

JERRY BROWN (D), California Attorney General: Our wealth, our society, our being is driven by oil and carbon. And when we say we have to make a shift, that is extremely difficult. It's intellectually dishonest to somehow say we can get some lightbulbs, or you know, get a Prius and we're all done. No. This is going to take massive technological innovation. It's going to take changes in the way we live and work. And it's going to take cooperation of unprecedented degrees among business and government and among countries.

That's where we are. There's no other word except daunting. I'm hopeful. I'm cautiously optimistic. But I would have to say one has to approach this with great humility.

ANNOUNCER: There's more to explore on our Web site, where you can watch the whole program again on line and watch more of Martin Smith's interviews with energy executives, or read more of the interviews, find out where venture capital is placing its energy future bets and what the next president will do, and why do the French love nuclear power. Then join the discussion about this program at PBS.org.

Next time on FRONTLINE: On January 20th, a new president will take office.

- He's going to find crises in a half dozen different countries around the region.

ANNOUNCER: He will inherit two wars.

- Every single operation you are doing in Iraq is an operation you can't be doing in Afghanistan.

ANNOUNCER: An overstretched military.

- There are no extra troops left on the shelf.

ANNOUNCER: And an enemy beyond reach.

- The nightmare scenario is a failed state in Pakistan.

ANNOUNCER: The War Briefing next time on FRONTLINE.

FRONTLINE's Heat is available on DVD. To order, visit Shoppbs.org or call 1-800-PLAY-PBS. [$24.99 & s/h]

FRONTLINE is made possible by contributions to your PBS station from viewers like you. Thank you.

With major funding from the John D. and Catherine T. MacArthur Foundation, helping to build a more just world. And additional funding from the Park Foundation. Major funding for Heat was provided by the FRONTLINE Journalism Fund, a grant from Hannelore and Jeremy Grantham, and the Grantham Foundation for the Protection of the Environment. And additional support from Scott Nathan and Laura DeBonis. Additional funding for Heat is provided by the Kendeda Fund, and the Nathan Cummings Foundation, and Wallace Genetic Foundation, Incorporated.